6 ms·

Where I live, in an affluent town on the east coast, homes have been going for 50%+ over ask. And the asks were high. Something is broken. Homes that wound hav

Where I live, in an affluent town on the east coast, homes have been going for 50%+ over ask. And the asks were high. Something is broken. Homes that wound have been listed at $1,000,000 in 2019 are going for $1.750,000 today. Interest rates going up should cool it off but I fear it will break much of the rest of the economy. There was a massive mismatch in executive policy and fed policy and here we are.

elephanteeee 5y ago
What’s the mismatch? Biden got a trillion or two in handouts and Powell bought up all the bonds. Now Biden is taking a step back (not completely but not another trillion) and Powell said he’ll start selling.
- nemo44x 5y ago
  Halting rent and college tuition paybacks while also spending trillions for people not to work and businesses to not open while the fed also cut interest rates continuously. They decided to test MMT and it failed so badly.
  - jeffbee 5y ago
    Now they're talking about college loan forgiveness which is going to directly goose home prices, all over again.
  - ahoy 5y ago
    Any landlord who finds themselves so burdened by missed rent payments ought to just sell their properties. The market's never been better. They can use the windfall to start a real business instead.
  - vdnkh 5y ago
    Trump's tax cuts certainly didn't help either. Or let's just blame it on "handouts" again.
    - redisman 5y ago
      And ballooning debt and minuscule rates during the “good times”
  - andrekandre 5y ago
    > They decided to test MMT and it failed so badly. is this in reference to inflation of housing prices or in general?
- 01100011 5y ago
  Pretty sure the covid stimulus passed while trump:Biden was/is president is like 2:1. Not giving either one a pass though because Biden reappointed Powell and failed to give Powell the political direction to raise rates late last year when it was obvious inflation was anything but transitory.
  - jt_b 5y ago
    The Federal Reserve is independent of the executive branch's political aims. Its mandate is to keep inflation and unemployment in check with the tools it has at its disposal (interest rates, balance sheet).
    - 01100011 5y ago
      > The Federal Reserve is independent of the executive branch's political aims. That's the theory anyway. The fed chair is appointed by the president and still has some accountability to the political machine. It is independent in many ways but it is not truly independent. > Its mandate is to keep inflation and unemployment in check Yes and now it is also trying to fight climate change, wealth gaps, and other "ESG" goals.
  - elephanteeee 5y ago
    Even if you’re right that’s kind of misleading. Trump’s stimulus and Powells actions were basically necessary to prevent another 2008style economic collapse. Biden’s came as “voluntary” unemployment was already high and during a recovery. Either way that was another example of the fed and exec branch working together. However anyone’s feelings are about politics and the things said, us policies were quite competent during the pandemic. For anyone interested trillion dollar triage is a great book.
01100011 5y ago
> Something is broken Say it with me: > “Inflation is always and everywhere a monetary phenomenon...” - Milton Friedman It turns out years of suppressing rates combined with dumping many trillions of dollars onto a supply constrained economy causes a rise in prices. Huh... You'd think the trained professionals at the fed would know this by now, but they continue to believe they can defy reality.
- InTheArena 5y ago
  So much for MMt(at least the way that certain people perceived MMT to be) We are about to pay for 12 years of easy money policies.
  - dodobirdlord 5y ago
    The crux of MMT is the idea that spending creates money and taxing destroys money, so deficits are made up and only inflation matters. Doesn’t seem like a “so much for” moment for MMT, which also predicts this if there’s too much money in the economy. The real question is whether there’s political appetite for the MMT-prescribed treatment here, which is to significantly raise taxes. I’m guessing no.
    - somenameforme 5y ago
      Why would taxation "destroy money" in times of endless deficits? All that taxed money, and much more on top, is spent before it's even received.
      - RealityVoid 5y ago
        The essence of MMT as I understand it is that money is made up so the government should spent as much as necessary for infrastructure, essentially creating money, and in order to cut off inflation it should tax money and just... do nothing with it, just destroy it. I know that MMT is very hated but it seems very compelling.
      - dodobirdlord 5y ago
usrn 5y ago
High immigration + no construction -> High demand + low supply. Then on top of that you have record inflation with stagnant wages. The market is being completely rational. What "overvalued" here means is "are homes expensive compared to local wages" not "are homes irrationally expensive." Normally this would drive construction but the market is distorted by credit such that new construction is less economical (a result of 2008.) This also forms a feedback loop: people are giving up on labor since housing consumes more than they make, driving up the price of construction, driving up the price of housing. It's likely the dollar will crash before middle/lower class hosing will.
- throw123123123 5y ago
  US immigration is cratering, it's a national crisis nobody cares about. The supply constraint is old but its not why housing is high - housing prices are high even in places where there is a lot of construction. Monetary policy explains it a lot better, and it predicts that at some point the trend will reverse.
  - usrn 5y ago
    Perhaps legal immigration is but immigration overall is very high. I've hit my quota, here's my reply: illegal immigrants still have to live somewhere So they're going to take housing off the market. They manage to rent houses in various ways (employers, government programs, ngos etc.)
    - throw123123123 5y ago
      An illegal immigrant cant have a bank account, credit check or buy a home. Is that what you perceive as competition in the housing market?
      - s1artibartfast 5y ago
        I'm places like California, illegal immigrants can get state issued drivers license and open bank accounts, and that ignores the simplicity of renting or owning a house in another's name
vkou 5y ago
Asking prices are just advertising to get your foot in the door. If an asking price of $1 were to start a bigger bidding frenzy than one that's 30% underpriced, sellers would list homes for a buck.

elephanteeee 5y ago

What’s the mismatch? Biden got a trillion or two in handouts and Powell bought up all the bonds. Now Biden is taking a step back (not completely but not another trillion) and Powell said he’ll start selling.

nemo44x 5y ago
Halting rent and college tuition paybacks while also spending trillions for people not to work and businesses to not open while the fed also cut interest rates continuously. They decided to test MMT and it failed so badly.
- jeffbee 5y ago
  Now they're talking about college loan forgiveness which is going to directly goose home prices, all over again.
- ahoy 5y ago
  Any landlord who finds themselves so burdened by missed rent payments ought to just sell their properties. The market's never been better. They can use the windfall to start a real business instead.
- vdnkh 5y ago
  Trump's tax cuts certainly didn't help either. Or let's just blame it on "handouts" again.
  - redisman 5y ago
    And ballooning debt and minuscule rates during the “good times”
- andrekandre 5y ago
  > They decided to test MMT and it failed so badly. is this in reference to inflation of housing prices or in general?
01100011 5y ago
Pretty sure the covid stimulus passed while trump:Biden was/is president is like 2:1. Not giving either one a pass though because Biden reappointed Powell and failed to give Powell the political direction to raise rates late last year when it was obvious inflation was anything but transitory.
- jt_b 5y ago
  The Federal Reserve is independent of the executive branch's political aims. Its mandate is to keep inflation and unemployment in check with the tools it has at its disposal (interest rates, balance sheet).
  - 01100011 5y ago
    > The Federal Reserve is independent of the executive branch's political aims. That's the theory anyway. The fed chair is appointed by the president and still has some accountability to the political machine. It is independent in many ways but it is not truly independent. > Its mandate is to keep inflation and unemployment in check Yes and now it is also trying to fight climate change, wealth gaps, and other "ESG" goals.
- elephanteeee 5y ago
  Even if you’re right that’s kind of misleading. Trump’s stimulus and Powells actions were basically necessary to prevent another 2008style economic collapse. Biden’s came as “voluntary” unemployment was already high and during a recovery. Either way that was another example of the fed and exec branch working together. However anyone’s feelings are about politics and the things said, us policies were quite competent during the pandemic. For anyone interested trillion dollar triage is a great book.

01100011 5y ago

> Something is broken Say it with me: > “Inflation is always and everywhere a monetary phenomenon...” - Milton Friedman It turns out years of suppressing rates combined with dumping many trillions of dollars onto a supply constrained economy causes a rise in prices. Huh... You'd think the trained professionals at the fed would know this by now, but they continue to believe they can defy reality.

InTheArena 5y ago
So much for MMt(at least the way that certain people perceived MMT to be) We are about to pay for 12 years of easy money policies.
- dodobirdlord 5y ago
  The crux of MMT is the idea that spending creates money and taxing destroys money, so deficits are made up and only inflation matters. Doesn’t seem like a “so much for” moment for MMT, which also predicts this if there’s too much money in the economy. The real question is whether there’s political appetite for the MMT-prescribed treatment here, which is to significantly raise taxes. I’m guessing no.
  - somenameforme 5y ago
    Why would taxation "destroy money" in times of endless deficits? All that taxed money, and much more on top, is spent before it's even received.
    - RealityVoid 5y ago
      The essence of MMT as I understand it is that money is made up so the government should spent as much as necessary for infrastructure, essentially creating money, and in order to cut off inflation it should tax money and just... do nothing with it, just destroy it. I know that MMT is very hated but it seems very compelling.
    - dodobirdlord 5y ago

usrn 5y ago

High immigration + no construction -> High demand + low supply. Then on top of that you have record inflation with stagnant wages. The market is being completely rational. What "overvalued" here means is "are homes expensive compared to local wages" not "are homes irrationally expensive." Normally this would drive construction but the market is distorted by credit such that new construction is less economical (a result of 2008.) This also forms a feedback loop: people are giving up on labor since housing consumes more than they make, driving up the price of construction, driving up the price of housing. It's likely the dollar will crash before middle/lower class hosing will.

throw123123123 5y ago
US immigration is cratering, it's a national crisis nobody cares about. The supply constraint is old but its not why housing is high - housing prices are high even in places where there is a lot of construction. Monetary policy explains it a lot better, and it predicts that at some point the trend will reverse.
- usrn 5y ago
  Perhaps legal immigration is but immigration overall is very high. I've hit my quota, here's my reply: illegal immigrants still have to live somewhere So they're going to take housing off the market. They manage to rent houses in various ways (employers, government programs, ngos etc.)
  - throw123123123 5y ago
    An illegal immigrant cant have a bank account, credit check or buy a home. Is that what you perceive as competition in the housing market?
    - s1artibartfast 5y ago
      I'm places like California, illegal immigrants can get state issued drivers license and open bank accounts, and that ignores the simplicity of renting or owning a house in another's name

vkou 5y ago

Asking prices are just advertising to get your foot in the door. If an asking price of $1 were to start a bigger bidding frenzy than one that's 30% underpriced, sellers would list homes for a buck.